Air France-KLM has submitted a non-binding offer for a minority stake in TAP Air Portugal, positioning itself at the forefront of a potential bidding contest for the Portuguese flag carrier as Europe’s airline groups seek further consolidation.
The Franco-Dutch group confirmed it had submitted its offer to state holding company Parpública on April 2, marking the next stage in Portugal’s privatisation process, which is expected to conclude by the summer. The government is seeking to sell up to 49.9% of TAP’s capital.
Meanwhile, Germany’s Lufthansa and UK-Spanish group IAG were also invited to express interest, with Lufthansa CEO Carsten Spohr confirming earlier this week in an internal memo to staff that his firm would submit a non-binding bid. However, IAG has reportedly expressed reservations about conditions attached to the sale, including limits on ownership and requirements to expand operations across Portugal’s airports - though some analysts still expect it to bid.
A new hub
For Air France-KLM, the strategic rationale for acquiring a stake in TAP centres on network expansion and hub development. Chief executive Benjamin Smith said the group sees TAP as “a natural fit” within its multi-hub strategy, citing the strength of Lisbon as a hub and the airline’s established brand and connectivity.
“Lisbon would become the Group’s unique southern European hub,” the company said, highlighting its geographical position as a gateway to the Americas and Africa. In particular, Brazil is identified as a key market for both TAP and Air France-KLM, offering potential for network synergies.
The group’s strategy would focus on strengthening operations at Lisbon while also developing connectivity in other Portuguese cities, including Porto. Air France-KLM said the largely complementary nature of its network and TAP’s would allow for increased connectivity across Portugal and internationally.
Integration into Air France-KLM’s wider commercial platform is also central to the proposal. TAP would gain access to a global network spanning Air France, KLM and Transavia, as well as partnerships with Delta Air Lines and Virgin Atlantic within the transatlantic joint venture. The group said this would support TAP’s ambition to expand its international reach.
Air France-KLM emphasised its approach to consolidation, which focuses on cooperation and operational synergies while maintaining the identity of acquired airlines. The group said TAP would retain its Portuguese heritage while benefiting from economies of scale, a broader network and enhanced competitiveness.
Sustainability prioritised
The proposal also includes collaboration across business areas, including decarbonisation, which the group identified as a strategic priority. Air France-KLM added that it has experience working alongside state shareholders, a key consideration given the Portuguese government’s ongoing role in TAP.
The bidding process comes as European airline groups look to strengthen their positions in a fragmented market, with TAP’s strong transatlantic network and Lisbon hub making it a strategically attractive asset.
Separately, Air France-KLM has continued to secure financing for its fleet. On March 30, Crédit Agricole CIB closed a Japanese Operating Lease with a Call Option (JOLCO) financing for an Airbus A321neo leased to KLM, with the bank acting as global arranger, facility agent, security trustee and sole lender.
At the same time, Crédit Agricole also closed a sustainability-linked JOLCO financing for an Airbus A220-300 aircraft leased to Air France. The financing includes conditions tied to sustainability performance targets, including the proportion of new-generation aircraft and sustainable aviation fuel in Air France’s operations.
Crédit Agricole acted as global arranger, sustainability coordinator, facility agent and security trustee, and was joined by BBVA and LCL as lenders.